Just 32 days removed from declaring Chapter 11 bankruptcy, American Media, Inc. is hopeful that they will have their debt formally wiped away by 2011. Publisher of major tabloids The National Enquirer and Star as well as fitness mags Shape and Flex, AMI filed for bankruptcy protection in November due to a decline in ad sales and circulation numbers. According to Mediaweek, the U.S. Bankruptcy Court for the Southern District of New York gave the green light to AMI’s prepackaged financing plan — one which will lower the company’s $855 million debt by $355 million and increase profitability.
AMI chairman, president, and CEO David Pecker comes out as the big winner in all of this as he was awarded a long-term contract from AMI’s principal shareholders. While AMI still will have to address the challenge of selling their title’s issues in a landscape where print costs are up and ad sales are down, Pecker is optimistic for the publisher’s future:
This will allow AMI to finally capitalize on all the digital opportunities available for our brands, continue to strengthen our print properties, expand our publishing services efforts and ultimately accomplish what my goal has always been — to build a major media company that will be among the industry’s elite.
Apparently the Manhattan Bankruptcy Court didn’t get the memo on the $50 limit for all secret Santa gifts. $355 million is quite the holiday treat, surely enough to ignore the remaining $500 million of debt.